Why Single Women Build Less Equity in Homes

Female homeowners are still earning less equity than their male counterparts, according to an August 2017 study by Redfin. The disparity remains because women still make less money than their male counterparts, put down a smaller down payment and often carry a higher student loan level, said Nela Richardson, a chief economist for Redfin.

The Seattle-based real estate brokerage examined 199,387 homes that were sold in 18 of the largest metros in 2012. In the five years following their purchase, women earned a median $171,313 of home equity compared to $186,403 of equity earned by men.

The difference was $15,090, or 8.1%, which means for every dollar of home equity single men earned over five years, single women earned just 92 cents. Out of the 199,387 homes, single women purchased 39.9% of them.

The gap in gender equity was the largest in Seattle, where women earned 6.3%, or $20,983, less equity over the five-year period. The second-largest gap occurred in Columbus, Ohio with 6.2% less, followed by 6.2% less in Baltimore, 6.0% less in San Francisco and 5.8% less in San Diego.

The gap was narrower in Omaha, Neb., with women earning 0.5% less equity, Portland with 0.8% less, Denver with 2.0% less and Oakland, Calif., with 2.0% less.

The home equity was calculated by adding the initial equity from the down payment and the principal paid on the mortgage to the appreciation of the home since its purchase date. The appreciation was determined by subtracting the original purchase price of the home from the current estimate on Redfin's website.

Mind the Gap

The workplace gender pay gap is one of the largest contributors and leads to women spending $25,000 less on homes than their male counterparts, Redfin's analysis said. The more expensive homes are also more likely to be in better neighborhoods where the appreciation occurred faster.

Women are faced with an additional two years of student loans on average, according to a study by the American Association of University Women and the gender pay gap remains a factor.

The playing field could be evened out by more women owning homes, which remains the single largest factor for middle class employees to "create wealth over the long term," she said.

Single women can create more home equity by shopping around for financing and saving for a larger down payment, which immediately gives them more equity in stable markets. A larger down payment usually means they can qualify for a lower interest rate on their mortgage.

Making an extra payment once a year or even paying a little extra each month means homeowners can pay down the principal instead of their interest much faster.

Women have more student loan debt than men, according to 2016 data from Credit Sesame, a San Francisco-based credit advice site, said CEO Adrian Nazari. The National Center of Education Statistics reported that in the fall of 2016, 11.7 million females attended college, compared to only 8.8 million males.

"Women have 21% more debt than men and this, coupled with making less than men, is putting women at a disadvantage when it comes to home buying," he said.

Another major factor is that women tend to have lower credit scores than men, which means they are being offered higher-rate loans on their mortgages, which adds up quickly over 30 years. While men usually only have credit scores that are 10 to 20 points higher, the difference can put one gender into the prime category vs. and subprime credit categories.

"Combined with the lower income and higher debt experience, this means women are buying 'less home' because their money is going into interest to the bank instead of building equity, as part of the mortgage principal," Nazari said.

Some businesses still pay women less money for the same position because they mistakenly believe that many females will eventually leave the company to start a family, said Crystal L. Green, a real estate broker with Level Group, a NYC-based brokerage firm.

"The lack of equal pay comes from justifying that a single woman doesn't need to earn as much as a man who deserves a higher income in order to be the bread winner," she said.

In many cases, in the aftermath of a divorce or a failed relationship, the woman "generally bears the brunt of child rearing expenses whether or not she receives child support," Green said.

Most women will face some form of sexual harassment in the workplace as recent public cases have demonstrated. The widespread effect is that it has damaged many women's careers, forcing some to resign and has stymied many others from receiving promotions and salary increases, she said.

"Many HR departments often do not offer a sympathetic ear to employees who air their grievances and nothing comes of it," Green said. "Perhaps with the media attention and #metoo movement, organizations will enact policies that will create healthier work environments for all."

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